COMMISSIONER OF INCOME TAX Vs. PITTIE CHARITABLE TRUST

JUDGEMENT

(1.) THE assessee is a public charitable trust. The trustees of the trust received by way of a donation, fixed deposit receipts with Messrs. Raja Bahadur Motilal Mills Ltd. from certain donors towards the corpus of the trust fund. The assessee claimed that the provisions of section 13(2)(a) or 13(2)(h) were not attracted in this case. This contention was rejected by the Income -tax Officer. The Appellate Assistant Commissioner agreed with the Income -tax Officer in this regard. The Tribunal, however, has held that these provisions are not attracted in the case of the assessee. Hence, the following question is referred to us under section 256(1) of the Income -tax Act, 1961 :

(2.) SECTION 11 provides, inter alia, that income derived from property held under trust wholly for charitable or religious purposes shall not be included in the total income of the previous year of the person in receipt of the income if it satisfies the provisions set out therein. Under section 13, however, section 11 will not apply in certain cases. One such case is set out under section 13(2)(a). It provides that the income or the property of the trust shall be deemed to be used or applied for the benefit of a person referred to in sub -section (3) and would, therefore, not qualify for exemption '(a) if any part of the income or property of the trust or institution is, or continues to be, lent to any person referred to in sub -section (3), for any period during the previous year without either adequate security or adequate interest or both'. This clause clearly provides that the income or property of the trust should be lent to the person specified in sub -section (3). In the present case, the trustees of the trust have not lent any part of the income or property of the trust to such a person. They have received as a donation fixed deposit receipts in a certain company. In our view, therefore, the Tribunal was right in coming to the conclusion that the receipt of such a donation did not amount to the assessee lending its income or funds or property to a person of the kind specified in sub -section (3).

(3.) IN the premises, the question which is referred to us is answered in the affirmative and in favour of the assessee. No order as to costs.